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Tsakalotos: Failure to reach debt deal now will threaten recovery

Finance Minister Euclid Tsakalotos has warned Greece’s creditors, in an interview to The Wall Street Journal, that its hopes of recovery in 2017 will be compromised if the issue of the country’s debt is not addressed in the next few weeks.

Speaking on Thursday, a day after visiting US President Barack Obama backed the key Greek demand for debt relief, Tsakalotos said that the eurozone has the opportunity to prove it can fix its problems rather than defer them.

“If we kick the can down the road and say ‘we will decide in two years’” over the way to make Greece’s debt sustainable, then, he told the paper, investors will also postpone decisions about investing in Greece.

His comments came as German Finance Minister Wolfgang Schauble and other German politicians insist that the country’s debt can be up for discussion at later date.

The European Central Bank has hinted that debt relief would also help Greece’s bid for inclusion in its bond-buying program. This, Tsakalotos said, could take place in March, 2017 and help kickstart recovery, and allow Greece to return to bond markets in late 2017 or early 2018.

No debt-relief agreement in December or January, he said, would mean no inclusion in the ECB’s program by March.
“It would be very short-sighted to stop the process that would bring us out of the program, which is within reach,” he said.

Tsakalotos, who is a leading member of the ruling leftist SYRIZA party, added that confidence in the beleaguered eurozone will only be restored if it can demonstrate that it can solve its problems.

“If it just postpones political decisions…then people will say it’s not working.”

Greece heads to the crucial Eurogroup on December 5 aiming to clinch a deal on debt relief as it has, it says, fulfilled its obligations concerning labor reforms and privatizations.